Foreign Investors Flee US Securities - Democratic Underground

Purveyor

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Tue Oct-16-07 11:01 PM
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Foreign Investors Flee US Securities

Source: The Financial Times

Foreign investors slashed their holdings of US securities by a record amount as the credit squeeze intensified, according to the latest Treasury figures.

The Treasury International Capital report - known as the Tic - for August will be closely watched because it appears amid growing concerns about the weakness of the US dollar, which hit a record low recently against a basket of major currencies.

"The bad news is that plainly show how vulnerable the dollar is to a continuation of the credit crunch-risk averse environment," said Alan Ruskin, chief international strategist at RBS Greenwich Capital. "There is no way to get away from the lack of corporate bond inflows, the foreign selling of US equities and the countervailing strong US purchases of foreign equities and bonds."

The Treasury said net sales of US market assets - including bonds, notes and equities - were $69.3bn in August after a revised inflow of $19.5bn during July. The August outflow exceeded the previous record decline of $21.2bn in March 1990.

Until now, US policymakers have appeared relatively relaxed about the dollar's decline, since there has been little sign to date that this has been been triggered by a broader global aversion to US assets. However, that attitude could change if signs emerge in the coming months that non-US investors are becoming more nervous about holding dollar assets, as a result of the recent credit squeeze.

Read more: http://www.euro2day.gr/articlesfna/45367613/

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tom_paine

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Tue Oct-16-07 11:04 PM
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1. They are only being prudent. Ours is the debased currency of a Third World Autocracy

To be more accurate, like the rest of the nation, our currency is roughly 40% of the way to tranfdorming itself into the debased currency of a Third World Autocracy.

Who can criticize the Free World for bailing out on THAT as quick as they can?

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dickbearton

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Wed Oct-17-07 12:15 AM
Response to Reply #1

2. Exactly; but the question is: were is a good place to bail out?

Have any good ideas.

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izquierdista

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Wed Oct-17-07 04:34 AM
Response to Reply #2

3. Anywhere but the US

You can still invest abroad from inside the US. Closed end funds that invest in a particular country or region, as well as ADRs of foreign companies traded within the US.

Part of the reason the stock market has been doing well while the middle class in the US is getting dumped on is that they have become multinationals. Their sucky earnings in the domestic market are offset by growth and expansion outside the US. Home Depot may be hurting from the housing crunch, but they are opening stores in Mexico and selling lots of Chinese products there.

Take a clue from them and diversify into foreign assets.

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City Lights

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Wed Oct-17-07 06:47 AM
Response to Reply #3

4. Hi izquierdista!

:hi: Welcome to DU! :hi:

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BadgerLaw2010

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Wed Oct-17-07 07:15 AM
Response to Reply #3

6. There are a lot of foreign markets that are disturbingly highly valued.

Edited on Wed Oct-17-07 07:15 AM by BadgerLaw2010

Companies in Brazil should not trade at premiums to US companies that do the exact same thing, as just one example. Brazil is hardly the worst offender.

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davekriss

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Wed Oct-17-07 07:43 AM
Response to Reply #3

8. I already have

A good portion of my investments is in foreign funds. Made the decision to do so when it was clear Bush was going to invade Iraq. I predicted the Euro would be trading 1.4+ per dollar if we invaded, and I wanted to protect my assets. I was right, but it has taken longer than I thought it would.

Note, though my foreign funds have performed better than the other funds in my portfolio, its not by all that much (I'll take the extra punch, but it's not like its been twice as good as my other funds).

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dickbearton

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Thu Oct-18-07 06:27 PM
Response to Reply #8

9. What you seem to be saying is a good foreign fund will beat a good domestic fund...

But a good foreign stock may or may not beat a good domestic
stock. Does that sound about right?

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davekriss

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Thu Oct-18-07 07:16 PM
Response to Reply #9

10. What I was saying...

...was that I moved a substantial portion of my assets into foreign mutual funds once it was clear we were going to war (2002), and those mutual funds have done better than my U.S. mutual funds, but not by as much as I expected they would now that we've broken through the 1.40 dollars-to-the-euro level. My foreign funds are returning about 14% over the last 12 months, while my other funds range from about 5% to 12%.

I guess I should look at returns since 2002, but I'm not all that excited about money to do so.

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formercia

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Wed Oct-17-07 07:03 AM
Response to Original message

5. Junior's trickle-up theory:

http://journals.democraticunderground.com/formercia

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sendero

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Wed Oct-17-07 07:25 AM
Response to Original message

7. The entities who packaged those subprime loans..

... and the ratings agencies that gave the packages AAA status (Moody's and Standard and Poors) have made a huge mistake that will cost America for years.

Foisting off this debt as though it were solid, and causing these banks to lose billions of dollars will not be soon forgotten.

This isn't about the "credit crunch", this is about a breach of trust.

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